A lot of sales jobs pay based on commission — you get a percentage back on what you sell. This definitely helps enforce the hustle — the more you sell, the more money you make. This is pretty well known with real estate agents, for example. The agent’s commission is even written into the contract that everyone signs. But what about insurance agents? They also often work on commission. So what does an insurance agent commission look like?
What Kind of Insurance?
Not surprisingly, the amount of insurance agent commission depends on the type of insurance being sold. Is the person selling auto insurance? Home insurance? Life insurance?
It also depends on the job itself.
Is the insurance agent considered a “captive agent,” meaning it works only for a single company? Or is it an “independent agent,” meaning that it can offer its customers insurance plans from a variety of different insurance companies? Generally speaking, an independent agent is going to make a higher insurance agent commission on the plans it sells as compared to a captive agent, who is committed to a single company.
General Insurance Agent Commission Amounts
On average, captive agents make around 5-10 percent on the policies that they sell. It’s not a bad amount, considering that many times, they have companies that help them advertise and bring in customers. After all, how many of us have seen one of the clever insurance company ads on television? Independent agents have to work a little bit harder to get those same customers, so they get about 15 percent.
Does this incentivize agents to push additional plans or things that a customer doesn’t need? In some cases, it absolutely can. It’s why a customer needs to be savvy about what they’re looking for in an insurance policy. You don’t want to be over-insured, but you certainly don’t want to be under-insured either.
What About Life Insurance?
Life insurance agent commissions can be a different bag. Depending on the policy, the agent can receive a huge commission on the policy – reportedly as much as 60-80 percent. This is why people need to be especially cautious about life insurance policies. People often get talked into more insurance than they need. I will write on this quite a bit in the future, but this is often how people get sucked into whole life insurance policies when term life insurance, which is significantly less expensive, would serve them well.
Of course, not all life insurance agents are unscrupulous and trying to sell you something you don’t need. You just need to be careful when looking for agents to make sure that they aren’t just looking out for their own bottom line.
Read More:
- The Essential Insurance Policies You Need for a Comfortable Life
- 5 Tricks To Get The Best Commercial Insurance Rates
- How to Live Without Health Insurance
Megan is a 40-something government employee in the Washington, DC area. She got interested in Personal Finance when she got out of college and realized that her paycheck wasn’t going to go as far as she had hoped. Since starting this blog, she has managed to buy a house and make a solid start on her retirement goals, and hopes to help others do the same. Here is her story:
In 2007, I was a gainfully employed 20-something with no debt but not a lot of knowledge about personal finance. It was a co-worker’s comment about Roth IRAs that sent me to the internet, searching for information. It was then that I realized that I really didn’t know a whole lot about personal finance and that my current financial situation was due a lot to inherent frugal tendencies, generous family members, a fear of debt, and good luck. While that was working for me, clearly I needed a better plan.
While I had no debt, I was also pretty much living paycheck to paycheck and not worrying about going over budget (I say this as if I had a real budget) because I had an emergency fund set aside to cover any overages.
Except that’s not what an emergency fund is for.
So I did a lot of research, read a lot of blogs, and decided that I needed a plan. I needed to budget. I needed to know what I was spending my money on. I needed to prepare for the future.
I decided to create a blog not only to make myself accountable to others but also to share the knowledge that I gained along the way. I’ve learned so much from my fellow bloggers, and I hope that my readers can find something useful in what I have to share as well.
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